Mercedes joins forces with Bosch to develop self-driving taxis

FRANKFURT (Reuters) - Mercedes-Benz parent Daimler and supplier Robert Bosch [ROBG.UL] are teaming up to develop self-driving cars in an alliance primarily aimed at accelerating the production of "robo-taxis".

The pact between the world's largest maker of premium cars and the world's largest automotive supplier forms a powerful counterweight to new auto industry players like Uber and Didi which are working on self-driving cars with a business model geared toward clients who want to use rather than own cars.

The alliance, which marks an end to Daimler's efforts to develop an autonomous car largely on its own, comes as tech companies and auto makers like BMW are forming rival strategic partnerships.

Financial terms of the deal, announced on Tuesday, were not disclosed.

Bosch, which was founded in 1886, the same year that Mercedes founder Carl Benz patented the motorcar, will develop software and algorithms needed for autonomous driving together with the Stuttgart-based carmaker.

Teaming up with Bosch helps Mercedes throw more engineering resources at autonomous cars, allowing it to bring forward the date for having a production-ready system for autonomous cars by several years.

The autonomous system will now be ready by the beginning of next decade, Daimler said, without disclosing when it had first envisaged the commercial launch of robo-taxis.

"The prime objective of the project is to achieve the production-ready development of a driving system which will allow cars to drive fully autonomously in the city," Daimler said in a statement on Tuesday.

The German carmaker has set its sights on the smartphone-based ride-hailing market which is currently dominated by China's Didi, and United States based Uber and Lyft Inc.

Last year, Goldman Sachs projected the market for advanced driver assistance systems and autonomous vehicles would grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035.

"Within a specified area of town, customers will be able to order an automated shared car via their smartphone. The vehicle will then make its way autonomously to the user," Daimler said. "The idea behind it is that the vehicle should come to the driver rather than the other way round."